Having Trouble Saving Your Emergency Fund?

Posted on February 29, 2008
Filed Under emergency fund, plan, savings |

In doing a bit of surfing around the internet this morning, I clicked on a google ad for a new way to save money and what I found was Wachovia Bank’s Way2Save plan.

For each check card transaction or when you pay a bill online or by automatic deductions, Wachovia will transfer $1 into your savings account. Think about it for a minute or two, if you are a regular check card user or if you pay most of your bills online, this could add up to a considerable amount of money over a year. . It reminds me a lot of Paid Twice’s Snowflake plan for paying off debts only applying it to savings instead of paying bills.
To top this off, they are offering 5% Annual Percentage yield which is about the best I have heard of lately. They also offer a 5% bonus of up to $300.

If you use a check card for a lot of your purchases and pay your bills online, this might be a great way to save some extra money. For example, if you use your check card to buy lunch every day and for groceries weekly and you pay 10 bills online plus putting gas on it a couple times a week, your savings would look like this:

Lunch Daily: $20 per month into Savings
Weekly Groceries: $4 per month
Bills: $10 per month
Gas & misc charges: $20 per month

Total into Savings account: $54 per month or $648 per year and you haven’t even noticed it. Because Wachovia is paying a 5% bonus the first year, you could also take advantage of regular transfers into savings to bump that amount up another $100 per month which would give you $1848 at the end of the year and a $92.40 bonus plus the interest it was earning.

If you have trouble actually putting money into your savings account, this might be a great option for you to consider. Let’s hear it for Wachovia for offering rewards for saving money! You should read the entire plan and agreement before deciding but it makes me want to start banking with Wachovia.

Does your bank have a similar plan?

This post was included in the carnival of personal finance #143

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Comments

6 Responses to “Having Trouble Saving Your Emergency Fund?”

Doug Hutchinson (5 comments.) on February 29th, 2008 11:52 am

The important thing to remember is this. Banks don’t do you any favors. They are always about thier bottom line. While you may get 5.00& interest,they are turning around and loaning that money at a higher rate. And what is in the fine print? Are there penalties or restrictions on what you can withdraw? Here is some of the “fine print” that can have a profound affect on your participation.

1 Excludes online payments that post to your account as paper checks.

2 Customers enrolled in the program earn a 5.00% annual bonus in Year 1, up to $300, and a 2.00% percent annual bonus in Years 2 and 3, up to $300. Bonuses are calculated on an annual basis for the first three years on eligible balances. The eligible balance is equal to the savings contributions for the current year (i.e., the sum of the $1 transfers and up to $1,200 of the recurring transfers) or the Way2Save account balance, whichever is less.

3 The Annual Percentage Yield (APY) for Year 1 of the program is 5.00% and 2.00% for Years 2 and 3. The Way2Save account is a variable rate account and the rate is subject to change after account opening. Fees may reduce earnings.

That is straight from the Wachovia website. While it may be a good solution for some people in the short term, one needs to look for opportunities that work to cancel interest you pay on your debt. And there are some remarkable strategies that are unknown to most Americans.
CindyS on February 29th, 2008 12:10 pm

Doug - Banks are a business and I would expect them to have their own bottomline firmly in mind. This is a good way to save even if you move the money at the end of the year into a higher yield savings account.

I personally am struggling to save at all and many of my readers are in the same position, trying to save money for our initial and very basic emergency fund. By automating this somewhat and applying the snowflake principal of a dollar here and a dollar there, it adds up over the long term.
Doug Hutchinson (5 comments.) on February 29th, 2008 1:06 pm

I agree with you completely. My point is just that what may be initially offered may look good on the surface, but may have restrictions and penalties that can have a negative affect in the end. What are the restrictions about taking your money out of that account before a specific time?

We must become better consumers and, like you and all of the people who have blogs like yours, we can educate ourselves to a variety of ways to reduce debt and save money. Researching and asking questions is critical to finding solutions that are truly effective.

No one understands better than me what pinching pennies is all about. I am a Vietnam veteran and in 2002 the VA declared me 100% totally and permanently disabled. Because it was deemed non-service connected, I received (my most recent pension amount) $931.00/ month. On top of that, if I worked, then every dollar I earned came right off the top of that pension. Net result, no change in actual income. I did work “under the table”, essentially making me a criminal. That is until I found a couple of businesses that gave me an income that exceeded my pension amount.

It’s difficult to make ends meet, much less to get ahead. I applaud you, Cindy, and the rest of the good citizens who are trying to reverse the debt problem we are faced with.

If not us, then who? The government? If not now, then when? When our children grow up? Our Founding Fathers had something better in mind and I often look to their words on economic (personal or governmental) issues.

“It is a wise rule and should be fundamental in a government disposed to cherish its credit, and at the same time to restrain the use of it within the limits of its faculties, “never to borrow a dollar without laying a tax in the same instant for paying the interest annually, and the principal within a given term; and to consider that tax as pledged to the creditors on the public faith.”
Thomas Jefferson, letter to John Wayles Eppes, June 24, 1813

We have a 9 Trillion dollar national debt. 19 cents of every tax dollar paid goes just to pay the INTEREST on that debt. The principal is not being paid down. Seems like a poor way to behave fiscally…

Keep the faith and keep doing what you are doing. It does make a difference.
Debt Free Revolution (12 comments.) on March 1st, 2008 1:13 am

Here’s a better idea: instead of eating out for lunch 20 time sin a month, pack your lunch If you eat “on the cheap” and spend $5 per lunch, that will net you a savings of $100. If you eat an average priced lunch which is approximately $8 per lunch, packing your lunch will save you $160 in a month. Much quicker, more deliberate, and no fine print needed
Lindsay (17 comments.) on March 1st, 2008 2:26 pm

This could even work if you just transfered the money yourself. Every time you pay a bill online, for example, you could just transfer an extra dollar over to your savings. It would all add up, or, at least be better than nothing. I’l have to try it.
Carnival of Personal Finance #143 - Oh Canada Edition on March 10th, 2008 7:23 pm

[...] Oh My Aching Debts has found a new way to save money. [...]